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Industrial pollution in economic development: Kuznets revisited

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  • Hettige, Hemamala
  • Mani, Muthukumara
  • Wheeler, David
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    Abstract

    Using new international data, the authors test for an inverse U-shaped, or"Kuznets,"relationship between industrial water pollution and economic development. They measure the effect of income growth on three proximate determinants of pollution: the share of manufacturing in total output, the sectoral composition of manufacturing, and the intensity (per unit of output) of industrial pollution at the"end of pipe."They find that the manufacturing share of output follows a Kuznets-type trajectory, but the other two determinants do not. Sectoral composition gets"cleaner"through middle-income status and then stabilizes. At the end of the pipe, pollution intensity declines strongly with income. The authors attribute this partly to stricter regulation as income increases and partly to pollution-labor complementarity in production. When they combine the three relationships, they do not find a Kuznets relationship. Instead, total industrial water pollution rises rapidly through middle-income status and remains roughly constant thereafter. To explore the implications of their findings, the authors stimulate recent trends in industrial water pollution for industrial economies in the OECD (Organization for the Economic Cooperation and Development), the newly industrialized countries, Asian developing countries, and ex-COMECON (Poland and former Soviet Union) economies. They find roughly stable emissions in the OECD and ex-COMECON economies, moderate increases in the newly industrialized countries, and rapidly growing pollution in the Asian developing countries. Their estimates for the 1980s suggest that Asian developing countries displaced the OECD economies as the greatest generators of industrial water pollution. Generally, however, the negative feedback from economic development to pollution intensity was sufficient to hold total world pollution growth toabout 15 percent over the 12-year sample period.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1876.

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    Date of creation: 31 Jan 1998
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    Handle: RePEc:wbk:wbrwps:1876

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    Keywords: Water and Industry; Public Health Promotion; Environmental Economics&Policies; Sanitation and Sewerage; Pollution Management&Control; Environmental Economics&Policies; Water and Industry; TF030632-DANISH CTF - FY05 (DAC PART COUNTRIES GNP PER CAPITA BELOW USD 2; 500/AL; Sanitation and Sewerage; Pollution Management&Control;

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    References

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    1. John, A & Pecchenino, R, 1994. "An Overlapping Generations Model of Growth and the Environment," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 104(427), pages 1393-1410, November.
    2. Hettige, Hemamala & Martin, Paul & Singh, Manjula & Wheeler,David R., 1995. "The industrial pollution projection system," Policy Research Working Paper Series 1431, The World Bank.
    3. Wheeler, David & Mody, Ashoka, 1992. "International investment location decisions : The case of U.S. firms," Journal of International Economics, Elsevier, Elsevier, vol. 33(1-2), pages 57-76, August.
    4. Hartman, Raymond S. & Huq, Mainul & Wheeler, David, 1997. "Why paper mills clean up : determinants of pollution abatement in four Asian countries," Policy Research Working Paper Series 1710, The World Bank.
    5. Hettige, Hemamala & Huq, Mainul & Pargal, Sheoli & Wheeler, David, 1996. "Determinants of pollution abatement in developing countries: Evidence from South and Southeast Asia," World Development, Elsevier, Elsevier, vol. 24(12), pages 1891-1904, December.
    6. H. David Robison, 1988. "Industrial Pollution Abatement: The Impact on Balance of Trade," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 21(1), pages 187-99, February.
    7. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
    8. Levinson, Arik, 1996. "Environmental regulations and manufacturers' location choices: Evidence from the Census of Manufactures," Journal of Public Economics, Elsevier, Elsevier, vol. 62(1-2), pages 5-29, October.
    9. Selden Thomas M. & Song Daqing, 1995. "Neoclassical Growth, the J Curve for Abatement, and the Inverted U Curve for Pollution," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 162-168, September.
    10. Hua Wang & Wheeler, David, 1996. "Pricing industrial pollution in China : an econometric analysis of the levy system," Policy Research Working Paper Series 1644, The World Bank.
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    Cited by:
    1. Martin Gassebner & Noel Gaston & Michael J Lamla, 2008. "Relief For The Environment? The Importance Of An Increasingly Unimportant Industrial Sector," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 46(2), pages 160-178, 04.
    2. MANAGI Shunsuke & HIBIKI Akira & TSURUMI Tetsuya, 2008. "Does Trade Liberalization Reduce Pollution Emissions?," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 08013, Research Institute of Economy, Trade and Industry (RIETI).
    3. Talukdar, Debabrata & Meisner, Craig M., 2001. "Does the Private Sector Help or Hurt the Environment? Evidence from Carbon Dioxide Pollution in Developing Countries," World Development, Elsevier, Elsevier, vol. 29(5), pages 827-840, May.
    4. Anna Strutt & Kym Anderson, 2000. "Will Trade Liberalization Harm the Environment? The Case of Indonesia to 2020," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 17(3), pages 203-232, November.
    5. Jha, Raghbendra & Murthy, K. V. Bhanu, 2003. "An inverse global environmental Kuznets curve," Journal of Comparative Economics, Elsevier, vol. 31(2), pages 352-368, June.
    6. Munasinghe, Mohan, 1999. "Is environmental degradation an inevitable consequence of economic growth: tunneling through the environmental Kuznets curve," Ecological Economics, Elsevier, Elsevier, vol. 29(1), pages 89-109, April.
    7. Konrad von Moltke & Daniel E. Ryan & Sheila Abed de Zavala & Diego Escuder Leira & Carlos Eduardo Frickmann Young & Carlos Galperín & Héctor Ricardo Leis & Patricia I. Vásquez & Eduardo Viola, 2001. "Medio ambiente y comercio: El caso de Mercosur y los principios de Winnipeg," IDB Publications 30858, Inter-American Development Bank.
    8. Gernot Klepper, 2001. "Globalisierung der Weltwirtschaft und Stoffströme," Kiel Working Papers 1082, Kiel Institute for the World Economy.

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